WASHINGTON—The House Financial Services Committee has begun its markup of legislation that would make it easier to charter new credit unions.
The legislation, the Promoting New and Diverse Depository Institutions Act (H.R. 4590), has the support of CUNA.
The bill was introduced by Rep. Jake Auchincloss (D-MA) and would require NCUA and other prudential regulators to conduct a study to assess the challenges by prospective de novo financial institutions and create a plan to increase de novo financial institutions in a way that promotes safety and soundness.
“A challenge credit unions face in serving underserved and unbanked communities is the high regulatory burden to create new or de novo credit unions. Prior to the Great Recession, an average of 7.7 de novo credit unions were created each year,” the letter reads. “However, in the years after, and in the wake of the implementation of Dodd-Frank, that average decreased to the creation of just 2.2 de novo credit unions per year.
‘Time-Consuming and Complex’
“Chartering a credit union is a time-consuming and complex endeavor – including identifying capital sources, determining field of membership, developing a business plan, appointing a board of directors. NCUA offers consulting services at no cost once a preliminary field of membership is approved,” continued CUNA. “But it can still take three years, or even longer, to receive a charter.”